Pre-settlement lawsuit funding usually comes in the form of non-recourse cash advances, provided to the injured person in return for a promise to repay the advance after the lawsuit settles or a victory in court. As this is “non-recourse” funding, an injured person does not have to repay the advance if they are unsuccessful in the lawsuit, and only has to repay up to the amount of their share of the settlement in the event that the settlement is smaller than anticipated.

Due to the risk involved in issuing a non-recourse funding, the fees associated with pre-settlement funding can be significant. There are legal, ethical, and practical issues which should be taken into consideration, if you are considering applying for pre-settlement funding.

An injured person contacts a company that offers pre-settlement lawsuit funding, sometimes at the suggestion of an attorney. The finance company contacts the lawyer who is handling the case, and obtains information about the case.

Based upon that information provided, the loan company estimates the value of the likely eventual settlement or verdict, and offers a cash advance to the injured person based upon that estimate. The fee may be a flat fee, or a monthly fee that accrues each month the loan is outstanding.

When the case settles, or the defendant pays after losing in court, the loan and associated fees are paid to the finance company. These advances are offered as non-recourse funding, which means that an injured person has no obligation to repay if the lawsuit is lost.

Similarly, if the ultimate settlement or verdict is smaller than anticipated, the amount that must be repaid never exceeds the amount of the injured person’s share of that verdict or settlement. For legal reasons, these advances are not characterized as loans.

Litigation can take a very long time, sometimes even dragging on for years. While cases are pending, even where an injured person’s attorney is paying all of the legal expenses associated with the litigation, the injured person has to have enough money to get by.

If the injured person is unable to work, has reduced income, or has expenses associated with care or disability, it may not be possible to wait until the end of the lawsuit before obtaining funds. Given the fees involved in pre-settlement funding, it is important for injured people to consider any available alternatives.

This type of financing should ordinarily be the last resort. The fees are premised upon the risk to the lender associated with non-recourse lending, but keep in mind that these companies choose their cases carefully in order to minimize risks, and if they offer you an advance they believe that you will receive money from your lawsuit.

A question that perhaps seems obvious is, why can’t injured people simply borrow money from their lawyers? The answer is that state bar associations recognize that when a lawyer becomes a creditor to a client, a conflict of interest is created that may interfere with the attorney-client relationship.

Sometimes an attorney won’t want to sign any contract with a settlement financing company, and some states prohibit lawyers from signing onto liens of the type necessary to secure this type of funding. As a result, typically companies require that the injured person sign the contract, and that the attorney sign an acknowledgement of the client’s instruction that the loan and associated fees be repaid from any eventual verdict or settlement.

At least one state prohibits lawyers from participating in the settlement funding company’s Kamagra jelly evaluation process. Absent lawyer involvement, it is unlikely that a finance company would be able to obtain enough information about a case to risk issuing non-recourse funding.

In order to avoid usury laws (laws against charging excessive rates of interest), the funds you receive from a pre-settlement funding company will not be described as a “loan”. For example, the advance might be described as a “cash advance”, ‘investment”, or as “venture capital”.

Technically, as the contract is not to repay the amount received but is instead a promise to pay a portion of any eventual verdict or settlement (which may never occur), these amounts are not loans. No matter what happens, a person who receives pre-settlement funding keeps the full amount of the advance.

Pre-settlement lawsuit funding should be considered as a last resort, after all other funding options are exhausted. Due to the high cost of this type of funding, any decision to accept an advance should be made very carefully.

When seeking pre-settlement funding, it makes sense to check with several companies, to obtain the lowest possible fees. With these tips, you should be well on your way to obtaining the funding you need to get you through your personal injury case.

Author Bio: Terry Daniels has been working with personal injury law in Utah for the past 10 years. He has written hundreds of articles dealing with the subject. He recommends this Injury Lawyers Utah.

Contact Info:
Terry Daniels
TerryDaniels09@gmail.com
http://www.utahinjury.com

Category: Legal
Keywords: Injury Lawyers Utah